Delhi High Court

Sh. Mukesh Jha & Anr. vs Union Of India And Ors. on 11 July, 2013

Author: Valmiki J. Mehta

*     IN THE HIGH COURT OF DELHI AT NEW DELHI


+                  W.P.(C) No.1722/2013


%                                                              11th July, 2013


SH. MUKESH JHA & ANR.                                        ..... Petitioners
                  Through:                Mr. Kirti Uppal, Senior Advocate
                                         with Mr. Sujeet Kumar Mishra,
                                         Advocate for petitioner No.1.
                                         Mr. Dipak Bhattacharya, Advocate
                                         with Mr. Harman Guliani, Advocate
                                         for petitioner No.2.


                          Versus


UNION OF INDIA AND ORS.                                    ..... Respondents

                  Through:               Mr. Rajeev Mehra, ASG with Mr.
                                         Jatan Singh, CGSC and Mr. Soayib
                                         Qureshi, Advocate and Mr. Kartikey,
                                         Advocate for UOI.
                                         Mr. Ashish Wad, Advocate with Ms.
                                         Kanika Butani, Advocate for
                                         respondent No.4.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J. MEHTA

To be referred to the Reporter or not?





 VALMIKI J. MEHTA, J (ORAL)

1. This writ petition is filed by the petitioners seeking the relief of

continuation of petitioner No.1 as the Chairman-cum-Managing Director of

the respondent No.4/M/s. Bridge and Roof Company (India) Ltd. till the age

of 65 years. Petitioner No.1‟s ordinary date of superannuation was

31.10.2012 and therefore petitioner No.1 superannuated on 31.10.2012 as he

had reached 60 years being the age of superannuation. The petitioner No.1

claims continuation as the Managing Director of the respondent No.4-

company placing reliance essentially on the circular dated 24.7.2007 of the

Government of India, Ministry of Heavy Industries and Public Enterprises,

Department of Public Enterprises and the related circulars. As per the

petitioner No.1 this circular allows the petitioner No.1 to continue as the

CMD of the respondent No.4 on the ground that the petitioner No.1 has

contributed to turn around the loss making PSU/respondent No.4.

2. Petitioner No.1 was first appointed as the Director (Finance) of

the respondent No.4-company for five years or till his date of

superannuation or till further orders by the letter dated 1.4.2005 of Ministry

of Heavy Industries and Public Enterprises. Before this period of five years

or till further orders or till the date of superannuation came to an end the

petitioner No.1 came to be appointed as the Managing Director of the

respondent No.4 vide letter dated 1.2.2007 of the Ministry of Heavy

Industries and Public Enterprises for a period of five years or till the date of

his superannuation or till further orders. Appointment of the petitioner No.1

was w.e.f 1.5.2007 to 30.4.2012. Irrespective of the fact that the

appointment was till further orders even if we take the appointment as a

fixed period of five years, the period of five years expired. From

31.10.2012, the date of superannuation, the petitioner No.1 was continued as

CMD of the respondent No.4 by the letter dated 19.9.2012 of the Ministry of

Heavy Industries and Public Enterprises. The issue is of continuation after

31.10.2012 at least for one year and preferably upto sixty five years in terms

of the circular dated 24.7.2007.

3. The essence of the circular dated 24.7.2007 is to give

encouragement to good entrepreneurship of the board level appointees of

PSUs such as the respondent No.4 whereby if the public sector undertaking

to which the board appointment is made is a loss making/sick undertaking

and this loss making/sick undertaking is turned around because of the board

level appointee, such board level appointee in terms of the circular dated

24.7.2007 gets an entitlement to be considered for being continued till the

age of 65 years. It may be noted that there is no legal entitlement of

appointment but only an entitlement for consideration for appointment

because the expression used in the letter dated 24.7.2007 is "may" and not

"shall". Obviously, the expression used is "may" because it is an employer

which decides the continuation of appointment of an employee. No

employee can force his continuation with an employer, moreso after the

ordinary date of superannuation.

4. The only issue which is called for decision in the present case is

that whether the board level appointees who turned around the sick company

can take benefit of earlier appointment as another board level appointee at

another post of the board of the concerned company prior to his being

appointed in the present post of which continuation is sought. In the case of

the petitioner No.1, we are talking of the petitioner No.1‟s continuation as a

CMD till the age of 65 years i.e continuation is sought as the Chairman-

cum-Managing Director and not of any other post. Once the claim is to

continuation for 65 years is of a post, then, in my opinion the only

interpretation which may be given to the circular dated 24.7.2007 is that the

person who seeks continuation till the age of 65 years that continuation is at

the post for which continuation is sought and qua that post/appointment it is

to be seen that when he was appointed the undertaking in question was a

loss making/sick undertaking and during the tenure of appointment (of the

petitioner No.1), this loss making/sick undertaking has been converted into a

profit making undertaking. In my opinion, no benefit can be given of prior

service in another post with the respondent No.4 of the petitioner No. 1

inasmuch as the continuation is sought upto 65 years not at the earlier post

but at the present post.

5. There is no dispute from the balance sheets of the respondent

No.4-company which has been filed on record that on the date when the

petitioner No.1was appointed as CMD of the respondent No.4, the

respondent No.4-company was not a loss making/sick undertaking. The

financial data alongwith the balance sheets show that there is a profit before

tax for each financial year from 2007-08 to 2011-12. Therefore, it cannot be

said that the respondent No.4 was a loss making undertaking as on the date

when the petitioner No.1 took the charge as the CMD of respondent No.4-

company. Unfortunately, what is a sick industry does not seem to find

mention or is defined in the circular dated 24.7.2007 and therefore I would

in this regard feel that once for continuous number of years there is a profit

before tax, a company cannot be said to be a sick company. It may also be

noted that the sick company is not defined in any of the circulars of the

concerned Ministry as a company which is under the aegis of BIFR under

the Sick Industrial Companies (Special Provisions) Act, 1985. Also, at this

stage, I must take on record the documents filed by the respondents and

which show that in fact the respondent No.4-company has been a profit

making company from the year 2002-03 onwards.

6. I may note that the entire discussion aforesaid is made and the

case is decided by me on the ground of entitlement to continue upto the age

of 65 years on the plea of turning around of the loss making/sick company,

however, I may at the cost of repetition state that even assuming there is

turning around of a loss making/sick company it is not mandatory on the

Union of India to continue the board level appointee to the age of 65 years

because the expression used in the letter of the Government of India dated

24.7.2007 is "may" and not "shall".

7. After the arguments were concluded and the judgment was

completely dictated in Court, learned senior counsel for the petitioner No.1

has drawn the attention of this Court to paragraph 4(a) of the resolution of

the Government of India, Ministry of Heavy Industries and Public

Enterprises dated 6.12.2004 to show that what is a sick company and which

reads as under:-

"4(a) All sick CPSEs will be referred to the Board for revival/restructuring. For the purposes of the Board‟s consideration, company will be considered „sick‟ if it has accumulated losses in any financial year equal to 50% or more of its average net worth during 4 years immediately preceding such financial year and/or a company which is a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA)."

However, when one goes through the averments made in the writ petition,

one does not find any factual basis whatsoever laid out as to how this para

4(a) with its sub parts are complied with for the respondent No. 4-company

to become a sick company in terms of this para 4(a) and how accordingly

petitioner No. 1 can take benefit. In any case, I have already referred to the

fact that the circular dated 24.7.2007 only requires the appointment as a

discretionary measure because the word used is "may" and not "shall".

There is therefore no legal or contractual right for the petitioner No.1 for

being continued as CMD for 65 years.

8. In view of the aforesaid discussion, I am of the opinion that

petitioner No.1 has no legal entitlement to continue as a CMD of the

respondent No.4-company upto the age of 65 years. Accordingly, I do not